In times of big volatility, along with stop orders, sell orders can make for nice trades.
Along with being able to place a "stop limit" order that will protect you from
an all out massacre if the market tanks, you can also institute a "sell order"
when you buy a stock. (Actually you can attach it anytime, even if you already
own a stock or option). The idea here is this, if you bought XYZ and paid 100
for it, maybe you would be happy with a 6 point gain. You also know that with
the market whipping around, XYZ could fall to 96, reverse and be at 107 in the
course of the morning. So, with that type of volatility, what can you do to get
a nice profit off your trade, when you may not be there to see it happen? What
you can do is attach an electronic "sell" order to your stock. This way, if the
stock moves up during one of those market swings, the electronic order will fire
off and you will sell the stock.
So, let's again say we paid 100 for XYZ and we think its reasonable to see XYZ
get to 107 in a run up. By placing an electronic sell order to XYZ at 106 or
106 1/2, you can go about your business. Then, if XYZ does indeed run up to
or over your sell order, the order will execute and you will have sold out, even
though you weren't there to watch. In our example we would have gotten a 6 point
profit, even if later in the day XYZ pulled back again to under 100.
For those of you who can't watch in real time, sell orders make sense for sure.
Don't put unrealistic numbers on them and you will be surprised how many times
you will make a decent profit on a sale you didn't know took place! So, what
are the downsides? The only real down side to this is that you can "underestimate"
the moves and miss some upside. For instance let's say you bought XYZ at 100
and placed a sell at 106. Then you come home from work only to find the market
had a banner day and XYZ closed at 111. You would have sold out at 106, thus
missing 5 dollars worth of upside. Well, that stinks, but I don't think it stinks
as much as finding out XYZ went for 100 to 107 and back to 99 and you still
own it!
So, in these volatile times, you can still make good trades by placing stops
and sells electronically. Not many people can monitor the action on a minute
by minute basis, and a sell order at least gives you a chance at capturing a
mid day move. Give them a try, keep the upside "reasonable" (in other words don't
buy XYZ at 100 and place a sell at 130, it may never get there. Try 105 or something.)
and I think you will be pleasantly surprised at how many times the intra day
volatility makes a good trades for you!
For more trading tips just send a blank e-mail to:
[email protected]
Along with being able to place a "stop limit" order that will protect you from
an all out massacre if the market tanks, you can also institute a "sell order"
when you buy a stock. (Actually you can attach it anytime, even if you already
own a stock or option). The idea here is this, if you bought XYZ and paid 100
for it, maybe you would be happy with a 6 point gain. You also know that with
the market whipping around, XYZ could fall to 96, reverse and be at 107 in the
course of the morning. So, with that type of volatility, what can you do to get
a nice profit off your trade, when you may not be there to see it happen? What
you can do is attach an electronic "sell" order to your stock. This way, if the
stock moves up during one of those market swings, the electronic order will fire
off and you will sell the stock.
So, let's again say we paid 100 for XYZ and we think its reasonable to see XYZ
get to 107 in a run up. By placing an electronic sell order to XYZ at 106 or
106 1/2, you can go about your business. Then, if XYZ does indeed run up to
or over your sell order, the order will execute and you will have sold out, even
though you weren't there to watch. In our example we would have gotten a 6 point
profit, even if later in the day XYZ pulled back again to under 100.
For those of you who can't watch in real time, sell orders make sense for sure.
Don't put unrealistic numbers on them and you will be surprised how many times
you will make a decent profit on a sale you didn't know took place! So, what
are the downsides? The only real down side to this is that you can "underestimate"
the moves and miss some upside. For instance let's say you bought XYZ at 100
and placed a sell at 106. Then you come home from work only to find the market
had a banner day and XYZ closed at 111. You would have sold out at 106, thus
missing 5 dollars worth of upside. Well, that stinks, but I don't think it stinks
as much as finding out XYZ went for 100 to 107 and back to 99 and you still
own it!
So, in these volatile times, you can still make good trades by placing stops
and sells electronically. Not many people can monitor the action on a minute
by minute basis, and a sell order at least gives you a chance at capturing a
mid day move. Give them a try, keep the upside "reasonable" (in other words don't
buy XYZ at 100 and place a sell at 130, it may never get there. Try 105 or something.)
and I think you will be pleasantly surprised at how many times the intra day
volatility makes a good trades for you!
For more trading tips just send a blank e-mail to:
[email protected]
